13 Finnish cities demand immediate reform of state funding system

Thirteen Finnish cities have called for urgent changes to the state funding system for municipalities, warning that current shortfalls threaten essential services, Yle reports. However, Minister of Local and Regional Government Anna-Kaisa Ikonen (National Coalition Party) stated that major reforms will not be implemented during this government term.

The cities—including Jyväskylä, Tampere, Turku, and Oulu—submitted an expert statement to Ikonen on Tuesday, arguing that the current system undermines constitutional municipal self-governance and equal access to services. They claim the 2023 social and healthcare reform (sote) disrupted funding, leaving some municipalities struggling to fulfill legal obligations such as education and early childhood services.

Ikonen acknowledged the system is “broken” but said a newly established parliamentary working group, which she chairs, will examine broader reforms beyond this term. “We are looking at service commitments, cooperation models, potential municipal mergers, and the entire funding structure,” she said. Smaller adjustments may still be possible, but significant changes will take longer.

The dispute centers on “sote adjustments,” which compensate municipalities for financial losses from the 2023 reform. A December report proposed removing these adjustments, affecting around 100 municipalities. State subsidies account for less than 15% of municipal funding, with tax revenue being the primary source.

The Chancellor of Justice is reviewing complaints from three municipalities (Tuusniemi, Pukkila, Laukaa) about the system’s constitutionality, with a response due by May 4. Ikonen noted the review could provide additional perspectives for resolving the issue.